This document discusses key metrics for understanding the true cost of solo advertising: value per lead, customer lifetime value, cost per lead, and cost per acquisition. It provides an example where a campaign cost $100 and generated $3,000 in income from 5,000 leads. With 60 customers purchasing a $25 product, the value per lead is $0.60 but the customer lifetime value is $50 per customer. Understanding these metrics empowers advertisers to determine how much they are willing to spend per lead given the potential lifetime value of acquiring new customers.

1. Contemplating the Cost of Solo Advertising
What do you think about when you calculate the cost of your solo ads? Do you think about costs per
click, per view, per lead, per sale? All of these things are important when it comes to advertising.
Sometimes, however, we tend to look at the surface cost of our advertising and forget to look at the net
cost of our advertising. Hopefully, the net cost of most of our advertising is on the minus side of zero.
Not only must we know what we pay, we must also understand what the cost actually means to our
business.
Let me explain. Let's look at advertising costs in the way I understood it explained by a presenter on an
Empower Network training session the other night.

2. Understanding the Cost of Your Advertising
There are a few things we must know if we are to understand the cost of our advertising. These are:
Value Per Lead
Customer Life Time Value
Cost Per Lead
Cost Per Acquisition

3. Value Per Lead (VPL)
Figuring out the value per lead in our advertising is fairly simple math.
Let's say you pay $100.00 for an advertising campaign and this campaign brings you an income of
$3,000.00. From this campaign you get 5,000 leads, subscribers and/or optin members (whatever term
you use). The Value Per Lead or value per email in this case is $0.60 ($3000/5,000). This means that
every lead you obtained is worth 60 cents.

4. Customer Life Time Value (CLTV)
Now let's look at customer life time value. Let's say that with the same campaign, you had sixty
customers who purchased a $25 product from you. These are your "front end" purchasers. To figure out
your customer life time value you would divide your total income of $3000 by the number of $25
purchasers (60) to give you a CLTV of $50.00 per $25 purchaser. This is a very important number to
know because it helps you to determine how much money you will spend on advertising. In this
instance, each $25 buyer is worth $50 to you in the "back end" (future sales).
You could look at it another way. Instead of every lead you obtained being worth sixty cents, you could
look at it to mean that every lead you obtained is actually worth fifty dollars (CLTV).

5. Cost Per Lead (CPL)
The next thing we have to ask ourselves is how much we are willing to spend to acquire each $25 buyer.
Just because all of our leads were not buyers, it does not mean they will not be in the future. So when
we are advertising, we can decide how much we are willing to pay for each lead that is worth $0.60 but
brings us a CLTV of $50.00.
If we are looking at each lead being worth sixty cents (VPL), we think that we wouldn't want to be
spending very much money to get that lead. However, if we think of it in terms of each lead actually
being worth fifty dollars (CLTV), our perspective on spending our advertising dollars changes
considerably, does it not?

6. Cost Per Acquisition (CPA)
We know that the VPL is $0.60 and that each 60 cents gives us the potential for $50.00 (CLTV). So from
this, we can decide what our CPA will be. Our CPA will be the dollar amount we are willing to spend per
lead. To acquire a lead that is worth $50.00 to you, how much would you be willing to spend to get that
lead? This would be your CPA.

7. Knowledge is Empowering
When you think of advertising, the amount you decide to spend should not only be based on your
budget or the money you have available to spend, but it should also be based on how much value you
get for the dollar you are spending. These numbers are important to know and empower you to make
wiser decisions when spending your advertising dollars.

8. Summary
Summarizing, our advertising costs should always be on the negative side of zero. That is, the value of
our advertising should far outweigh the cost of our advertising. Unless you know the above information
about the cost of solo advertising, you really do not know for sure if you are getting the most out of your
advertising dollar.

9. HAPPY ADVERTISING